5/13/26: GOP Midterm Bloodbath, Trump's Oligarch Trip To China, Prof Pape On China Advancing Rapidly

25:57Not least Marco Rubio. Yeah, you're right. The Secretary of State, who was a China hawk until he joins the Trump administration. It is amazing, right? So you've got to remember, Trump is the guy who really changed the game with China. So before Trump, all the way back to Nixon, you have presidents who've gone after engagement, right? We want to make the Chinese look more like us commercially. We want them to play by the rules of the game, the rules that the United States set after World War II, integrate them into the global system. He broke that consensus in his first term. He came in. They're raping us.

26:37They're pillaging us. They're making fun of us. They're cheating, lying, and so on. It was China, China, China, right? So he puts in place a whole system of tariffs, export controls, sanctions against Chinese companies. He tries to kill Huawei, the avatar of China's technology ambitions. Doesn't work. And then things go from bad to worse at the end of his administration. Do you remember during COVID? Blame it on China. It was the lab. China virus. China virus. The Kung flu. The Kung flu, as he calls it. And so, you know, he comes into his second term and he starts reassembling that sort of group of China hawks within the National Security Council.

27:22The people with a similar mindset to the people that he'd gathered in his first administration. And he does this U-turn and he gets rid of them all. He gets rid of all the China hoax, marginalizes the National Security Council. And then since then, he's just worked incredibly hard doing everything he can to do a deal with China, which includes, as we just mentioned, saying, OK, you can have our most advanced or some of our very advanced CHIP's national security document. They bring that to him. It's all written up, boilerplate, about how China is a threat, a major competitive adversary and so on.

28:06And Trump looks at this and he's thrown out. No, no, no, no, no. That's not what I want to talk. Blue pencils, all this. Comes back to his desk and there's all kinds of language about how we want an honorable peace. I think Hegseth talks about everlasting peace with China. So it's all flipped. People say he is the most China-friendly member of his own administration. I think it's true. That's true. And I think what it reflects is this business instinct, especially now, to dig himself out of the hole that he created, not just with tariffs. Now the Iran War. I mean you need something. I also – I'm curious for your view.

28:39How do the Chinese view it? Because this is now – remember, this summit has been postponed as a result of the Iran War. I don't think America has ever been strategically – this is my opinion. I don't think we've ever been strategically weaker than after this conflict, not only in terms of the standoff munitions that have all been expended, but just the sheer inability of the United States Navy to even open the Strait of Hormuz. If you're Xi Jinping in the PLA, you're watching this with glee. And so at a moment in a summit like this, what is China looking at? So I'd read some stories. I see China trying to, you know, they're warning meta of an acquisition.

29:10They're telling their companies, the teapot refineries, they're saying, yeah, we're not listening to this U.S. sanctions nonsense. All of these are signals. So what is Xi's objective in a summit like this? Xi's number one, two, and three objective is Taiwan. So he thinks that he has leverage because, as you say— Well, he does. He does, right? That, you know, the latest peace agreement proposal has collapsed in Iraq. Huge, huge mess. Strait of Hormuz more or less closed. Big pressure on the U.S. We just saw the inflation numbers out. Prices going up. A real threat in the midterms. Xi sees all this.

29:52So he sees that as leverage to get concessions on Taiwan. So he wants that. He wants tariff scale back. He wants U.S. technology. He wants Chinese companies off these blacklists, Pentagon blacklists. He wants more access to U.S. technology. But Taiwan is number one ask. So whenever we say Taiwan, he wants what? An end to the Taiwan consensus? So because I've seen some senators sending Trump letters, hey, you can't just stop Taiwan. The Taiwan's Relations Act is locked. Trump clearly, I mean, I think he's reported in 20 saying something like there's not a fucking thing we can do about it. Are we allowed to say that on a podcast?

30:34Oh, yeah. Don't worry. Listen, there's no cable, no FCC. You can say whatever you want. So, yeah, I mean, in terms of Trump's mindset, I don't think he particularly cares at this point. I think he's all about business. In the age of Iran, there actually is literally not a fucking thing you can do about it. So I'm curious, like from Trump's and the defense perspective, like what – because usually a China and a U.S. summit is all about defense. Trade would be secondary. Taiwan is number one for the Chinese. Here it seems Trump is a lot more desperate to get some sort of business accommodation than anything having to do with defense despite the fact that Hegseth is there on the trip.

31:10Right. So the easiest way to get a business deal with Xi is to give something away on Taiwan, right? Right. I don't think that the Chinese expect that Trump is going to sit there ripping up the Taiwan relation. No, you can't do it anyway because it's an act of Congress. He's not going to give away Taiwan, right? He's not going to go down in history as the president who handed Taiwan over to authoritarian China. That's not going to happen. And that's not what the Chinese are expecting. I think what they want out of him is a little tweak in the language. she's going to sit down with him and he's going to explain the problem he's just had by the way the head of the at the guomindang the opposition i saw that coming over it was shocking that yeah yeah amazing right so you know he's he thinks he's got her in his back pocket and to an extent he he has she's she's already parroting chinese talking points right so that gives him some hope that there's a resolution to his taiwan uh his taiwan problem so he wants trump to tweak the language, right?

32:11So he wants Trump to say things like, and it doesn't actually even have to write it down. He could just say this to Xi, you know, we do not support, or we are opposed to Taiwan independence, or yeah, we think unification of Taiwan with the mainland is a good idea. Small concession, and you might argue not a big deal. It goes down like a seismic shock in Taiwan because what it says to the people of Taiwan is we're on the table, right? We're a negotiating chip. And that is exactly what Xi Jinping wants. He wants to get inside Taiwanese heads. He wants to demoralize them. He wants to give them the sense that they don't own their future, that their future is going to be negotiated between the United States and China over their heads.

33:03And then they run up the white flag. The signal that then sends to the rest of the region is, my God, if he's going to put Taiwan on the table, what about us? Japan, Korea, right. The Japanese, that's what I've been writing about. The Japanese, the Koreans, they all have big problems with China. Now, look, they all trade with China, and don't get me wrong, a lot, right? They want US-China relations broadly to be okay, but they don't want it to be so okay that they form this kind of G2 condominium, lord it over the whole world, and sell out their interests. You know, China right now has sanctions on Japan, 40 Japanese companies.

33:42It's intimidating. It's intimidating Japan around these disputed islands, right? Same with South Korea. So that is what Asia-Pacific countries are looking at. What is he going to give away to get his precious trade deals? That's my last question. Japan and South Korea, already relations are strained. The trade, it was a big problem. I wish we'd spent even more time covering it, but that really pissed a lot of people off. The way that the tariffs and things went down caused big problems in Japan, big problems in South Korea. Then the Iran war was like gasoline, like literal, actually gasoline for their economies.

34:22Their stock markets and all that have recovered, but they're furious about what's happened here. They can't really say a lot of it out loud. If we do see some movement here with China, what I am curious for your view, I think the autos would be the thing that changed everything because obviously everybody knows the Chinese auto companies are just better than ours. It's not really a question. Like it's not even really in dispute. If we have some sort of licensing agreement of the big three and these autos, the two people it would hurt the most are the South Korean and the Japanese who have done everything hand over fist, bent over backwards to invest and to build here in the United States.

34:58And even they, they probably wouldn't be able to compete. So how worried are they about some – not just about a deal but specifically autos, which accounts for a lot of the trade that happens between the two? Or do you think I'm off the mark on autos? Because I really think something's going to happen. I think something might happen. I'm not sure that it's going to happen this time. Don't forget they're going to be four times this year, right? Or at least that's the plan. And it really is a complicated one. First off, look, I don't think this trillion dollar, I don't buy this trillion. I was hearing that number a couple of months ago, big Chinese.

35:33First of all, a trillion dollars of investment requires a level of trust that simply does not exist, right? I mean, you're building factories. You're talking about the next 10, 20 years, right? But that wouldn't stop them from announcing it. Yeah, from a fake number. It doesn't have to be real. Well, exactly. Look, you talk about the Japanese and the South Koreans combined. They announced$900 billion, right, of investments in the U.S. EVs is the interesting one. And, you know, the question, Trump himself has said, you know, fine. He said it in Detroit, right? It's like, yeah, let them in. Let them build.

36:06Jim Farley at Ford is much less sure about this because, as you say, these cars are much better. But politically, this is a huge problem because you're talking really now about EVs and about connected vehicles. They're connected to the Internet. And this is sort of Chinese CCP spies on wheels and so on. The question is, you know, is there a safe way to do this? The Canadians are working on this. The Japanese themselves are working on it. The Koreans are working. And don't forget, the Chinese have American EVs manufactured by Elon Musk in China. So it would be an obvious one. But as you say, and at the bottom end, see, they'd come in at the bottom end of the market, right?

36:49So with kind of 15 ,000, 20 ,000,$25 ,000 cars, which is the area that they – and they would compete in that space against Japanese and Koreans. Not against Detroit. Detroit is now all about big trucks and SUVs selling for sort of 60 ,000, 70 ,000, 80 ,000 bucks, right? They're probably going to be okay. Americans still love their combustion engines. Although in time, if you allow the Chinese in, they're going to be going after all of those markets. But I agree with you. I think this is the big open question is what do they do on EVs? Well, Andy, I really enjoyed talking to you. It's been a great preview.

37:22Everybody go and read his columns. We'll have links down in the description. Thank you for joining us, sir. Appreciate your time. Thanks for having me. Appreciate it. Welcome to my new podcast, Learn the Hard Way, with me, your host, and your favorite therapist, Kier Gaines. and in recognition of Mental Health Awareness Month, I'm bringing over a decade of my own experience in the mental health field and conversations with so many incredible guests. I'm talking Tripp Fontaine, Ryan Clark. Sometimes when we're in the pursuit of the thing, we get so wrapped up in the chase that we don't realize that we are in possession of the thing and we're still chasing it and we don't know when we've done enough because people scoreboard watch.

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39:17Jacob told Lovon, you're ruining my life. Listen to Kingdom of Fraud on the iHeartRadio app, Apple Podcasts, or wherever you get your podcasts.

39:31Imagine an Olympics where doping is not only legal, but encouraged. It's the enhanced games. Some call it grotesque. Others say it's unleashing human potential. Either way, the podcast Superhuman documented it all, embedded in the games and with the athletes for a full year. Within probably 10 days, I'd put on 10 pounds. I was having trouble stopping the muscle growth. Listen to Superhuman on the iHeartRadio app, Apple Podcasts, or wherever you get your podcasts. Joining us now is our great friend, Professor Robert Pape of the University of Chicago. It's great to see you, sir. Thanks for joining us.

40:08Thanks for having me. All right, so Professor, originally we're gonna talk about Iran. However, you sent along some slides that you've put together from your most recent travels to China. We just spoke with a journalist about what's going to happen in this summit, but you have a little bit more of an interesting and more in-depth view. So let's go ahead and start with some of these and put these slides up here on the screen. And you can tell us a little bit about what we're seeing. So the most important thing that's going to come out of this trip is the world is about to rediscover China in ways they are going to be blown away.

40:42And I know because I've been going to China since 1979. I've been touring economic industries since 1979. And when I went back in June last year while we were bombing Fordow, I was touring China's advanced industries two weeks. And China is just simply becoming an AI juggernaut. This isn't about is one company or one software ahead of America. That's a soda straw view of what's happening in China. The big picture, which is starting to blow away the journalists, is that China, we're beginning to confront the scale and the speed of China's already AI transformation in the economy. I don't just simply mean on the stock market.

41:31And so what China is doing is they are massively integrating AI, electrification, robotics, infrastructure in cities and manufacturing to uplift whole regions, not just simply small areas or small cities. They are producing massive products. This is what the journalists are discovering as they drive through Beijing. Cars, brand new, that are seas of cars, not seas of bicycles. And these are electric vehicles you can't buy in the United States. They're beyond Tesla. They're going to see, they're going to come back and say, I want one of those. And the reason is because during COVID, what happened is we put all our money,$10 trillion plus, in debt.

42:25And that was for good reason, to help our people. But what China did, and China can do this as an authoritarian state, they invested. They didn't give. They invested. And what I saw in China are not just seas of cars, but I visited these advanced cities now that have been uplifted in the last five years. Major construction that's occurring. Here's a good example. This is China's Pittsburgh, so to speak. And in 2015, when I was last there, it looks like Pittsburgh. Now, this is like a version of, Wuhan calls it their Optics Valley after Silicon Valley. These are advanced AI-driven laser robotics that are just uplifting the entire city of 10 million people.

43:20Because it's not just about building a company. They're integrating all this citywide. So there's massive construction going on. This is another good example. I was in Hangzhou in 1979. I was part of the trip I was on, and it was a fishing village. Today, look at this. This is a completely different Hangzhou. There's still some fishing there, by the way, but what you see is this has been uplifted as a city. Just imagine if that was St. Louis. Imagine if that—this is Senchen. Here's another example of what was a fishing village just a couple hours outside of Hong Kong on the Chinese side of the border.

44:04Also, I was there in 1979. Now, this is an industry leader. This is where BYD is. But notice the city. It's not just electric vehicle manufacturing. Look at the entire city of 10 million people. Brand spanking new airports. This is what we're missing. China, it's not that China's catching up to America. It's that we now need to catch up to China. And it's not about inventing a single product. You see, I think we think that, oh, as long as we have the latest single widget, we are ahead. What China's doing is inventing new widgets and then diffusing them massively across whole sectors and regions.

44:52They've uplifted about 50 to 100 million people in the last six years. What have we done for our Rust Belt? What have we really done for Erie, Pennsylvania, where I was born, Pittsburgh, St. Louis, Detroit, Baltimore? They look almost exactly the same and in many ways worse than they did six years ago. What has China done? They have invested up, and we're missing the big picture. That's such an important point, an important insight. And I wonder what you make of the fact President Trump was bragging about all of these CEOs who made the trip with him. You've got Tim Cook. You've got Jensen Wang.

45:29You've got Elon Musk and, you know, over 12 individual CEOs of American companies who decided to go along with him, who he brought along with him. What do you make of that decision? And what do you think that indicates about what he's hoping to get out of this trip? This slide show you just showed, and I have a lot more, puts everything in a new light. Those tech bros are going because they're falling behind. They want to catch up. Elon Musk is getting beat out by BYD. He's going to try to find how can he get in on the electric panels that are the, we need for AI, we need massive electricity. What is China doing?

46:08They are producing massive solar power. And yeah, that will help the planet, but that's not, I'm sorry, that's not why they're doing it. They're not selling it to help the planet. They're selling it to beat America and jettison above America. And those tech pros are going because they're falling behind. They don't want to admit it. They want to pretend, just like Trump, victory talk. Same thing's been going on here. We are falling behind and COVID was the hinge. And hardly anybody has been to China since COVID. I know, because when I used to go to China, I was surrounded by what? Americans. I go last June.

46:46There's no Americans. I mean, there are a few, but you could hardly find them. When was the last time a politician went to China? Gavin Newsom went about 18 months ago for three days. He went to BYD for three days, and there's still a video of it. That's it. And I came back. I tried to get a lot of politicians. I'm sorry to say, I tried to get journalists interested. Nobody could find the time because it wasn't on the radar. Well, Trump's trip here, this is what the journalists are all talking about, The seas of EVs, the green license plates, brand spanking new, beautiful Porsches EVs. This is not like Tercels.

47:31Okay. This is the leading edge. And they have even more that I got to see. And they won't put it, the robotic assembly lines, you can't find them on Google. That's why I had to go. So they are not bragging, talking smack like we do. What they're doing is staying under the radar and just eating our lunch. Right. You know, Professor, to link this a little bit to Iran, if we could put F-4, for example, up here on the screen. This is from The New York Times. New classified military intelligence assessments from earlier this month show Iran has regained access to most of its missile sites, launchers, underground facilities.

48:08U.S. Intel assesses Iran has restored operational access to 30 of the 33 missile sites it maintains along the Straits of Hormuz. and that 90 % of their Iranian underground missile sites are partially or fully operational. We just spoke with Andy Brown from Semaphore. He made clear Xi Jinping's number one priority, one, two, and three, out of this trip is something on Taiwan. Not necessarily a total change in the status quo, but trying to pierce the armor of the American view of Taiwan and his own Taiwan problem. It seems to me an American president has never met with a Chinese or even any counterparty in an instance in the midst of such a tremendous strategic defeat like what we have just suffered.

48:52And how that's going to shift the trip, I mean, I'm not exactly sure, not just because of what you're talking about, about their ascendance, but of our own weakness, a relative weakness in a moment like this at the time of their meeting. I'm just curious. Let me just make two points here, three. So first, on your show a couple weeks ago, I said this is going to be scary for America because he's about to go in this position of strategic defeat. She's got all the cards. He's going to want concessions on Taiwan. So this was, number one, absolutely predictable. Number two, if you look at that intel assessment, so what has happened with America's bases?

49:30It's not that we didn't refurbish anything. Those are bases basically 30 years old, 20 years old. We're still living in the 90s a lot of the way like we're living in the Rust Belt in the 90s. Point number three, imagine what's going to happen now with this emerging alliance. Remember, I'm talking about China, Iran emerging as the fourth center of world power in concert with Russia and with China. start to imagine even a trickle of China's AI that we're now seeing diffusing here in the electric vehicles and robotic assemblies, any of that going to Iran. And Iran can take advantage of it here. So this is the future here that we're going to contend with.

50:16We're still basically stuck in equipment, in basing structures. They're 20 years out of date. With COVID, there was a hinge. And China used COVID to jettison ahead in AI, not inventing a single product, but in diffusing this and integrating this across whole sectors. This could be Iran in the coming years. Yeah. Wow, that is very fascinating to think about. And Trump tried to downplay the Iran aspect of what would be discussed with China, saying, oh, I don't think that's going to be a big part of it. What do you make of China's view on our attack on Iran, on the Iran war? Trump loves to point out that they get a lot more of their oil through the Strait of Four Moves, which is true, than we do.

51:05So they certainly are impacted by it. Of course, China is a nation that does a lot of trade with the world. So anytime that trade flows are impacted, that's going to be something that they pay close attention to. So what do you think will be said and discussed with regard to the Iran war on this trip? Yeah, so a couple of points. First, notice that Trump is the master of sleight of hand like a magician. That stat that you just said is not false, but it's out of the larger context he doesn't want you to focus on like a magician. The bigger context is China has been weaning itself off of oil over the last decade.

51:38only 20 % of its energy needs now, 20 % are met with oil, and only 38 % of that come from the Persian Gulf. So last summer when I was visiting those advanced industries, the business people were telling me in the dinners that, yeah, they may suffer a percent or two here or there loss of GDP, but the fact of the matter is their whole business plan is built around Asia. built around, this will create opportunities for them to buy things and get deals on the cheap. They're more likely to jettison ahead as a result of this. Well, America gets sunk here. And what you are seeing is we just keep getting spun by Trump's rhetoric here, and we're missing big pictures.

52:25Some of it's because we just don't go to China. We try to get everything from behind our computers. And I know it's ironic that here I am, a professor, spend most of my life behind a computer, and I'm telling journalists and I'm telling politicians, you've got to get out and meet people and see the real world. That's what's happening. Otherwise, we're just stuck listening to President Trump's vision of the real world. Right. I think it's very important. And I do think that this is like a collision of moments with the Iran war and this summit, because I do expect some sort of accommodation is something in terms of trade, Taiwan.

53:00I don't know exactly what it's going to look like. And it may not be immediately obvious, but in the long run, professor, how do you see this playing out? Like the Taiwan question from China's perspective, it doesn't seem to me that they would want to do a full-on military invasion. They're more recent. They would be foolish to do a full-on military invasion, even if they could succeed, because what that would do is it would take the focus off of blame of the United States. It would push Europe away, push some of the other Asian partners away they want. So they could help us out. I say this only half jokingly here to my classes.

53:38The best way to bail out Trump from the Iran war would be if Xi would attack Taiwan, because this would fundamentally help Trump. And maybe he's going to try to tickle Xi and say, don't you want to do this? Well, I'm sorry. I don't want to be too facetious. But the fact of the matter is what China has done now since the 1996 Taiwan Strait Crisis, think about that. 30 years ago, they did some missile gunboat diplomacy. It totally backfired and failed. They haven't done that since. Now they've done some incursions. I know. I've been to Taiwan. I've had the briefings from the National Security Advisor here.

54:17So I've got some action. I'd go to Taiwan, too. And what you're really seeing is China here is just getting stronger and stronger and stronger incrementally. That's true economically. That's true militarily. And at some point, Taiwan may just fall in their lap. They may not have to actually use military force. And look, we've run out of all of these boutique missiles. There's so many of them. We're really hurting now in terms of supporting Taiwan. What's keeping Taiwan afloat is its actual Taiwanese military power, which is not trivial here. They have months they could hold out against China on its own.

54:59But whether America is the cavalry that would come to the rescue after, say, four or five months of a blockade against Taiwan, that's an open question at this point. And Xi sees it. Yeah. And finally, we can't have you here without asking you a little bit directly about the Iran war. What's your sense of where we are and are things just sort of on pause right now while Trump makes this trip? And do you feel that the pressure is continuing to build on him to take some sort of action? Yeah, this is a lull before a likely storm. We just don't know whether that storm is going to be, you know, sort of a cloudburst or it's going to be a hailstorm.

55:37And the issue here we've talked about many, many times is President Trump is going to have an incredibly difficult time swallowing that big L on him, which will, as bad as you think his political prospects are now, he's still got a large part of MAGA behind him. And they will be even more behind him as they get into the midterms. However, if he accepts the loss and really just says, yep, you're right, I've got to stand aside while Iran gets a nuclear weapon, think about that, because that's what the real future is here, then a lot of even MAGA is going to lose confidence in the great leader, because that great leader isn't so great anymore.

56:18So this is where the real problem of the trap is. As bad as it might seem to go down a road of escalation, going down the other road for Trump is worse. Now, the rest of us may be perfectly happy to make the choice. We don't want casualties. We'd rather go down and allow Iran to emerge as the fourth center of world power. That's the choice. And we may make a different choice. But the guy in the Oval Office is President Trump. And he's in there for two and a half more years. Well, you always leave us with a lot to think about, Professor. You certainly do. It's Escalation Trap on Substack. Go subscribe.

56:58Link down in the description. Thank you very much, sir. We appreciate your time. Oh, thank you. You're always ahead. You guys are always ahead. And help keep my Substack ahead. Good. Let's keep it up. We're glad to hear it. Number one. Glad to be part of that. Let's make it number one. Thank you guys so much for watching. We appreciate it. We will have another Breaking Point show tomorrow. That's right. First of all, our show. All right, so things got switched up, but nobody got shorted. All right, we'll see you all then.

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